Three-Weeks-Tight May Be Clue To Expect More Gains

Tighter is better. And a three-weeks-tight pattern may be a clue that your stock is about to add to its winning ways.

A three-weeks-tight is just what it sounds like. The stock will trade typically in a small range for three weeks, with closing prices each Friday no more than 1.5% above or below the prior Friday's close.

First, the stock must be rising from a base. Maybe you're frustrated that you had missed the ideal buy point, or wishing you had bought more than you did.

Remember, the three-weeks-tight is an add-on point, a spot that signifies a pause within a strong uptrend. The time to buy is when the stock moves past the highest price within the pattern.

A three-weeks-tight is not a base, so when you add shares, only buy a tiny bit. You don't want the average cost of your position to rise fast.

Tightness in a stock's trading behavior is a telling clue that big-money institutions are comfortable holding a position in the stock.

These are the powerful forces that prevent profit-taking or weak-hand selling from doing much damage to a stock.

If the stock you're looking at has no history of big gains, a three-weeks-tight pattern probably is nothing to get excited about.

Potash Corp. of Saskatchewan (POT) revealed a three-weeks-tight in 2007. In this case, Potash not only built an entry for investors but showed a longer-term improvement in its chart structure, probably reflecting the rising number of funds scrambling for this stock.

Potash broke out of a 62-week base in October 2006. The base was wide and deep. No one would have blamed you for passing on it.

But the fertilizer producer went on to build a flat base in the five weeks through 20071. What better pattern can a stock construct to atone for its previous sloppy ways?

Now look at the three-weeks-tight not far above the 56.39 split-adjusted buy point 2.

Potash rose 9% in the week ended April 13, the first week of the three-weeks-tight. The stock then showed weekly rises of 0.4%, 0.7% and 0.1% the next three weeks. This pattern actually turned into a 4-weeks-tight, a variation on the same theme. Potash rallied past the 64.70 entry and rose 135% by December.

Tighter is better. And a three-weeks-tight pattern may be a clue that your stock is about to add to its winning ways.

A three-weeks-tight is just what it sounds like. The stock will trade typically in a small range for three weeks, with closing prices each Friday no more than 1.5% above or below the prior Friday's close.

First, the stock must be rising from a base. Maybe you're frustrated that you had missed the ideal buy point, or wishing you had bought more than you did.

Remember, the three-weeks-tight is an add-on point, a spot that signifies a pause within a strong uptrend. The time to buy is when the stock moves past the highest price within the pattern.

A three-weeks-tight is not a base, so when you add shares, only buy a tiny bit. You don't want the average cost of your position to rise fast.

Tightness in a stock's trading behavior is a telling clue that big-money institutions are comfortable holding a position in the stock.

These are the powerful forces that prevent profit-taking or weak-hand selling from doing much damage to a stock.

If the stock you're looking at has no history of big gains, a three-weeks-tight pattern probably is nothing to get excited about.

Potash Corp. of Saskatchewan (POT) revealed a three-weeks-tight in 2007. In this case, Potash not only built an entry for investors but showed a longer-term improvement in its chart structure, probably reflecting the rising number of funds scrambling for this stock.

Potash broke out of a 62-week base in October 2006. The base was wide and deep. No one would have blamed you for passing on it.

But the fertilizer producer went on to build a flat base in the five weeks through 20071. What better pattern can a stock construct to atone for its previous sloppy ways?

Now look at the three-weeks-tight not far above the 56.39 split-adjusted buy point 2.

Potash rose 9% in the week ended April 13, the first week of the three-weeks-tight. The stock then showed weekly rises of 0.4%, 0.7% and 0.1% the next three weeks. This pattern actually turned into a 4-weeks-tight, a variation on the same theme. Potash rallied past the 64.70 entry and rose 135% by December.

See Also

Stocks for a number of fertilizer makers, led by Calgary, Alberta-based Agrium (NYSE:AGU) are climbing as companies raise dividends and see analysts ratchet up earnings projections for 2015. Agrium announced Jan. 22 it had raised its dividend payout ratio to 40% to 50% of free cash flow. That was ...

CF Industries (NYSE:CF) is in preliminary merger discussions with Yara International Tuesday over a possible deal that would create the world's largest fertilizer company in terms of sales. Norway's Yara International confirmed the talks, but said there is no guarantee that a merger will happen ...

Seasoned CAN SLIM investors know the proper buy point in a cup base is when the stock clears the left-side high or the top of a handle by 10 cents. Sometimes, it's worth seeking an earlier alternative entry. One advanced buying strategy involves drawing a downward-slanting trend line on the stock's ...

Hope is a powerful emotion, right up there with love, pride, anger and fear. These emotions guide and enrich our lives. But they're useless when it comes to stocks. You can love a stock or hate it. You can hope for all the world that it rises or that it recovers after a slide. You can lose sleep ...

05/20/2014 05:13 PM ET

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